MIDLAND, Mich., Oct. 25, 2016 (GLOBE NEWSWIRE) -- Chemical Financial Corporation ("Corporation" or "Chemical") (NASDAQ:CHFC) today announced 2016 third quarter net income of $10.7 million, or $0.21 per diluted share, compared to 2016 second quarter net income of $25.7 million, or $0.67 per diluted share and 2015 third quarter net income of $24.5 million, or $0.64 per diluted share. Net income was $59.7 million, or $1.40 per diluted share, for the nine months ended September 30, 2016, compared to $61.3 million, or $1.72 per diluted share, for the nine months ended September 30, 2015. The decrease in net income in the third quarter of 2016, compared to both the second quarter of 2016 and the third quarter of 2015, was driven by significant merger-related expenses incurred during the third quarter of 2016 resulting from completion of the Corporation's merger with Talmer Bancorp, Inc. ("Talmer").

As previously reported, the Corporation completed its merger with Talmer on August 31, 2016. Accordingly, the results of Talmer's operations are included in the Corporation's operations since the merger date. Talmer Bank and Trust will be operated as a separate subsidiary of the Corporation until its planned consolidation with and into Chemical Bank in the fourth quarter of 2016. The Corporation's total assets increased $7.9 billion in the third quarter of 2016 to $17.4 billion as of September 30, 2016 primarily due to the addition of $7.7 billion in assets added as a result of the merger with Talmer.

Excluding merger and transaction-related expenses ("transaction expenses"), net income in the third quarter of 2016 was $35.9 million, or $0.72 per diluted share, compared to $27.7 million, or $0.72 per diluted share, in the second quarter of 2016 and $25.1 million, or $0.65 per diluted share, in the third quarter of 2015.(1) Transaction expenses were $37.5 million in the third quarter of 2016, compared to $3.1 million in the second quarter of 2016 and $0.9 million in the third quarter of 2015. Net income, excluding transaction expenses, was $88.5 million, or $2.09 per diluted share, for the nine months ended September 30, 2016, compared to $65.5 million, or $1.84 per diluted share, for the nine months ended September 30, 2015. Transaction expenses were $43.1 million for the nine months ended September 30, 2016, compared to $5.7 million for the nine months ended September 30, 2015.

"Our third quarter 2016 financial results reflect not only the exceptional potential of Chemical Financial Corporation, but also of the underlying strength of the predecessor institutions. Our key core performance metrics for the quarter were solid, despite reflecting only a single month of the combined entities’ operations and prior to realizing the majority of our anticipated costs savings associated with the planned consolidation of Talmer Bank and Trust into Chemical Bank," noted David B. Ramaker, Chief Executive Officer and President of Chemical Financial Corporation. "Our core banking businesses continue to perform well, with strong organic growth in both loans and customer deposits during the third quarter. Credit quality remains high and expense growth is muted."

"On August 31, 2016, we were pleased to welcome the Talmer Bancorp team to the Chemical Financial Corporation family, bringing the combined team to approximately 3,500 bankers committed to meeting the financial service needs of our customers and communities. While we are cognizant of the challenges presented by large scale systems integrations, we are reassured by the fact that both institutions bring extensive experience to the merger integration process. When the institutions are consolidated as planned in the fourth quarter of 2016, our combined Chemical Bank footprint will blanket Michigan and extend into Ohio and Indiana, with 255 banking offices serving nearly 550,000 households and businesses," added Ramaker.

"With total assets exceeding $17 billion, we believe we have the scale to address the ever increasing regulatory burden that financial service providers face, and that our community-driven, Midwest-focused institution will provide a compelling option for the residents and businesses in the markets we serve. We remain committed and confident in both completing the integration of Talmer Bank and Trust into Chemical Bank and in our ability to achieve market share gains as we move forward," Ramaker said.

The increase in net income, excluding transaction expenses, in the third quarter of 2016, compared to both the second quarter of 2016 and the third quarter of 2015, was primarily attributable to incremental earnings resulting from the Talmer merger. The increase in net income for the first nine months of 2016, excluding transaction expenses, compared to the same period for 2015, was largely attributable to incremental earnings resulting from the merger with Talmer and the Corporation's acquisitions completed during 2015, in addition to an increase in net interest income resulting from organic loan growth.

The Corporation's return on average assets was 0.35% during the third quarter of 2016, compared to 1.11% in the second quarter of 2016 and 1.05% in the third quarter of 2015. The Corporation's return on average shareholders' equity was 2.7% in the third quarter of 2016, compared to 10.0% in the second quarter of 2016 and 9.8% in the third quarter of 2015. Excluding transaction expenses, the Corporation's return on average assets was 1.16% during the third quarter of 2016, compared to 1.19% in the second quarter of 2016 and 1.08% in the third quarter of 2015 and the Corporation's return on average shareholders' equity was 9.1% in the third quarter of 2016, compared to 10.8% in the second quarter of 2016 and 10.1% in the third quarter of 2015. (2)

Net interest income was $96.8 million in the third quarter of 2016, $19.3 million, or 25%, higher than the second quarter of 2016 and $23.2 million, or 32%, higher than the third quarter of 2015. The increase in net interest income in the third quarter of 2016, compared to both the second quarter of 2016 and the third quarter of 2015, was primarily attributable to loans acquired in the merger with Talmer, although also partially attributable to organic loan growth. The Corporation experienced organic loan growth of $186 million during the third quarter of 2016 and $617 million during the twelve months ended September 30, 2016. The Corporation's net interest income included $3.0 million of interest accretion on acquired loans in the third quarter of 2016, compared to $2.5 million in the second quarter of 2016 and $0.8 million in the third quarter of 2015.

The net interest margin (on a tax-equivalent basis) was 3.58% in the third quarter of 2016, compared to 3.70% in the second quarter of 2016 and 3.55% in the third quarter of 2015.(3) The decrease in the Corporation's net interest margin (on a tax-equivalent basis) in the third quarter of 2016, compared to the second quarter of 2016, was largely attributable to lower average yields on the Corporation's loan and investment securities portfolios resulting from the ongoing low interest rate environment, although also partially due to the impact from the Talmer merger. The average yield on the loan portfolio (on a tax-equivalent basis) was 4.12% in the third quarter of 2016, compared to 4.19% in the second quarter of 2016 and 4.15% in the third quarter of 2015. Interest accretion on acquired loans contributed 11 basis points to the Corporation's net interest margin (on a tax-equivalent basis) in both the third quarter of 2016 and the second quarter of 2016, compared to 4 basis points in the third quarter of 2015. Interest accretion on acquired loans comprised 13 basis points of the yield on the Corporation's loan portfolio in both the third quarter of 2016 and the second quarter of 2016, compared to 5 basis points in the third quarter of 2015. The average yield of the investment securities portfolio (on a tax-equivalent basis) was 2.28% in the third quarter of 2016, compared to 2.34% in the second quarter of 2016 and 2.08% in the third quarter of 2015. The Corporation's average cost of funds was 0.25% in the third quarter of 2016, compared to 0.27% in the second quarter of 2016 and 0.25% in the third quarter of 2015. The Corporation's cost of funds in the third quarter of 2016 was reduced by 4 basis points resulting from the acceleration of accretion of fair value adjustments on FHLB advances obtained in the merger with Talmer that matured during September 2016.

The provision for loan losses was $4.1 million in the third quarter of 2016, compared to $3.0 million in the second quarter of 2016 and $1.5 million in the third quarter of 2015. The increase in the provision for loan losses in the third quarter of 2016 was due to organic loan growth during the quarter. Net loan charge-offs were $1.8 million, or 0.08% of average loans, in the third quarter of 2016, compared to $1.8 million, or 0.10% of average loans, in the second quarter of 2016 and $0.8 million, or 0.05% of average loans, in the third quarter of 2015.

The Corporation's nonperforming loans, consisting of nonaccrual loans, accruing loans past due 90 days or more as to principal or interest payments and nonperforming troubled debt restructurings, totaled $61.7 million at September 30, 2016, compared to $62.0 million at June 30, 2016 and $81.2 million at September 30, 2015. Nonperforming loans comprised 0.48% of total loans at September 30, 2016, compared to 0.81% at June 30, 2016 and 1.13% at September 30, 2015. The decrease in the percentage of nonperforming loans to total loans at September 30, 2016 was primarily due to $4.9 billion of total loans added as a result of the merger with Talmer, as these loans are not classified as nonperforming after the merger date since they are recorded in loan pools at their estimated net realizable value in accordance with generally accepted accounting principles.

At September 30, 2016, the allowance for loan losses of the originated loan portfolio was $73.8 million, or 1.09% of originated loans, compared to $71.5 million, or 1.12% of originated loans, at June 30, 2016 and $75.6 million, or 1.33% of originated loans, at September 30, 2015. The allowance for loan losses of the originated loan portfolio as a percentage of nonperforming loans was 120% at September 30, 2016, compared to 115% at June 30, 2016 and 93% at September 30, 2015.

Noninterest income was $27.8 million in the third quarter of 2016, compared to $20.9 million in the second quarter of 2016 and $20.2 million in the third quarter of 2015. Noninterest income in the third quarter of 2016 was higher than the second quarter of 2016, due to a combination of incremental revenue resulting from the merger with Talmer, higher mortgage banking revenue and higher overdraft and seasonal ATM fee revenue for Chemical Bank. Mortgage banking revenue was $2.8 million higher in the third quarter of 2016, compared to the second quarter of 2016, due largely to an increase in gains from the sales of residential mortgages resulting from the merger with Talmer.

Operating expenses were $106.1 million in the third quarter of 2016, compared to $59.1 million in the second quarter of 2016 and $58.3 million in the third quarter of 2015. Operating expenses included transaction expenses of $37.5 million in the third quarter of 2016, $3.1 million in the second quarter of 2016 and $0.9 million in the third quarter of 2015. Excluding these transaction expenses, operating expenses were $68.7 million in the third quarter of 2016, compared to $56.0 million in the second quarter of 2016 and $57.4 million in the third quarter of 2015. The increase in operating expenses in the third quarter of 2016, compared to both the second quarter of 2016 and the third quarter of 2015, was attributable to incremental expenses resulting from the merger with Talmer. Operating expenses in the third quarter of 2016 at Chemical Bank, excluding transaction expenses, were virtually unchanged compared to the second quarter of 2016.

The efficiency ratio is a measure of operating expenses as a percentage of net interest income and noninterest income. The Corporation's efficiency ratio was 85.2% in the third quarter of 2016, compared to 60.1% in the second quarter of 2016 and 62.1% in the third quarter of 2015. The Corporation's adjusted efficiency ratio, which excludes certain items including transaction expenses, was 53.2% in the third quarter of 2016, compared to 54.6% in the second quarter of 2016 and 58.6% in the third quarter of 2015. (4)

Total assets were $17.38 billion at September 30, 2016, compared to $9.51 billion at June 30, 2016 and $9.26 billion at September 30, 2015. The increase in total assets during the three and twelve months ended September 30, 2016 was primarily attributable to the Talmer merger. As of the merger date, Talmer added total assets of $7.7 billion, including total loans of $4.9 billion and goodwill of $850 million. The increase in total assets during the twelve months ended September 30, 2016 was also attributable to loan growth that was funded by a combination of organic growth in customer deposits, an increase in FHLB advances and proceeds from maturing investment securities. Investment securities were $1.87 billion at September 30, 2016, compared to $1.01 billion at June 30, 2016 and $1.14 billion at September 30, 2015. The Corporation added $810 million of investment securities as part of the merger with Talmer.

Total loans were $12.72 billion at September 30, 2016, an increase of $5.07 billion, or 66%, from total loans of $7.65 billion at June 30, 2016 and an increase of $5.50 billion, or 76%, from total loans of $7.22 billion at September 30, 2015. As of the merger date, the Corporation added $4.88 billion of loans as part of the merger with Talmer. The Corporation also experienced organic loan growth of $186 million during the third quarter of 2016 and $617 million during the twelve months ended September 30, 2016.

Total deposits were $13.27 billion at September 30, 2016, compared to $7.46 billion at June 30, 2016 and $7.62 billion at September 30, 2015. As of the merger date, the Corporation added $5.34 billion of deposits as part of the merger with Talmer, including $403 million of brokered deposits. The Corporation also experienced organic growth in customer deposits of $571 million during the third quarter of 2016 and $477 million during the twelve months ended September 30, 2016, which was partially offset by decreases related to maturing brokered deposits of $101 million and $158 million during the three and twelve months ended September 30, 2016, respectively. The increase in deposits during the third quarter of 2016 was primarily due to a seasonal increase in municipal deposit accounts.

Securities sold under agreements to repurchase with customers were $327 million at September 30, 2016, compared to $256 million at June 30, 2016 and $330 million at September 30, 2015. Short-term borrowings were $400 million at September 30, 2016 and $300 million at June 30, 2016 (there were none at September 30, 2015) and consisted of short-term FHLB advances utilized by the Corporation to fund short-term liquidity needs. Long-term borrowings were $677 million at September 30, 2016, compared to $372 million at June 30, 2016 and $248 million at September 30, 2015. The increase in long-term borrowings during the third quarter of 2016 was attributable to the merger with Talmer, including $284 million of long-term borrowings held by Talmer as of the merger date. In addition, the Corporation borrowed $125 million under a three-year credit facility to partially fund the cash portion of the merger consideration.

At September 30, 2016, the Corporation's tangible equity to tangible assets ratio and total risk-based capital ratio were 8.7% and 11.2% (estimated), respectively, compared to 8.2% and 11.4%, respectively, at June 30, 2016 and 7.8% and 11.6%, respectively, at September 30, 2015. (5) At September 30, 2016, the Corporation's book value was $36.37 per share, compared to $27.45 per share at June 30, 2016 and $26.18 per share at September 30, 2015. At September 30, 2016, the Corporation's tangible book value was $19.99 per share, compared to $19.68 per share at June 30, 2016 and $18.32 per share at September 30, 2015. (6)

(1) Net income, excluding transaction expenses, and diluted earnings per share, excluding transaction expenses, are non-GAAP financial measures. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measures.

(2) Return on average assets, excluding transaction expenses, and return on average shareholders’ equity, excluding transaction expenses, are non-GAAP financial measures. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measures.

(3) Net interest margin, on a tax equivalent basis, is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Average Balances, Fully Tax Equivalent (FTE) Interest and Effective Yields and Rates” for a reconciliation of net interest income used to compute net interest margin on a tax equivalent basis to the most directly comparable GAAP financial measure.

(4) Adjusted efficiency ratio is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.

(5) Tangible equity to tangible assets ratio is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.

(6) Tangible book value per share is a non-GAAP financial measure. Please refer to the section entitled “Non-GAAP Financial Measures” in this press release and to the financial tables entitled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation to the most directly comparable GAAP financial measure.

Conference Call Details

Chemical Financial Corporation will host a conference call to discuss its third quarter 2016 operating results on Wednesday, October 26, 2016, at 10:30 a.m. ET. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-855-490-5692 and entering 716275 for the conference ID. The call will also be broadcast live over the Internet hosted at Chemical Financial Corporation's website at www.chemicalbank.com under the "Investor Info" section. A copy of the slide-show presentation and an audio replay of the call will remain available on Chemical Financial Corporation's website for at least 14 days.

About Chemical Financial Corporation

Chemical Financial Corporation is the largest banking company headquartered and operating branch offices in Michigan. The Corporation operates through its subsidiary banks, Chemical Bank and Talmer Bank and Trust, with 255 banking offices located primarily in Michigan, Northeast Ohio and other contiguous states. At September 30, 2016, the Corporation had total assets of $17.4 billion. Chemical Financial Corporation's common stock trades on The NASDAQ Stock Market under the symbol CHFC and is one of the issues comprising The NASDAQ Global Select Market and the S&P MidCap 400 Index. More information about the Corporation is available by visiting the investor relations section of its website at www.chemicalbank.com.

Non-GAAP Financial Measures

This press release contains references to financial measures which are not defined in generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the Corporation's tangible equity to tangible assets ratio, tangible book value per share, presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and information presented excluding transaction expenses, including net income, diluted earnings per share, return on average assets, return on average shareholders' equity, operating expenses and the efficiency ratio. These non-GAAP financial measures have been included as the Corporation believes they are helpful for investors to analyze and evaluate the Corporation's financial condition. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measure may be found in the financial tables included with this press release.

Forward-Looking Statements

This press release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy and the Corporation. Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "opinion," "opportunity," "plans," "potential," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs and expectations and involve substantial risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements include, among others, statements related to future levels of loan charge-offs, future levels of provisions for loan losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset levels, the effects on earnings of future changes in interest rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand the Corporation’s market share, expected performance and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, opportunities to increase top line revenues, the Corporation’s ability to grow its core franchise, future cost savings and the Corporation’s ability to maintain adequate liquidity and capital based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. All statements referencing future time periods are forward-looking.

Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on the Corporation, specifically, are also inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

This press release also contains forward-looking statements regarding Chemical's outlook or expectations with respect to its merger with Talmer, including the benefits of the transaction, the expected costs to be incurred and cost savings to be realized in connection with the transaction, the expected impact of the transaction on Chemical's future financial performance, and consequences of the integration of Talmer into Chemical.

Risk factors relating both to the merger and the integration of Talmer into Chemical include, without limitation:

The anticipated benefits of the merger, including anticipated cost savings and strategic gains, may be significantly harder or take longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events.

The integration of Talmer’s business and operations into Chemical, which will include conversion of Talmer’s operating systems and procedures, may take longer than anticipated or be more costly than anticipated or have unanticipated adverse results relating to Chemical's or Talmer’s existing businesses.

Chemical’s ability to achieve anticipated results from the merger is dependent on the state of the economic and financial markets going forward. Specifically, Chemical may incur more credit losses than expected and customer and employee attrition may be greater than expected.

The outcome of pending or threatened litigation, whether currently existing or commencing in the future, including litigation related to the merger.

The challenges of integrating, retaining and hiring key personnel.

Failure to attract new customers and retain existing customers in the manner anticipated.

In addition, risk factors include, but are not limited to, the risk factors described in Item 1A of Chemical's Annual Report on Form 10-K for the year ended December 31, 2015. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)

3.58

%

3.70

%

3.55

%

Reconciliation to Reported Net Interest Income

Net interest income, fully taxable equivalent (non-GAAP)

$

99,235

$

79,633

$

75,648

Adjustments for taxable equivalent interest (1):

Loans

(777

)

(717

)

(740

)

Tax-exempt investment securities

(1,649

)

(1,421

)

(1,291

)

Total taxable equivalent interest adjustments

(2,426

)

(2,138

)

(2,031

)

Net interest income (GAAP)

$

96,809

$

77,495

$

73,617

Net interest margin (GAAP)

3.49

%

3.60

%

3.46

%

(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.(2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.

Net Interest Margin (Net Interest Income (FTE) divided by total average interest-earning assets)

3.62

%

3.56

%

Reconciliation to Reported Net Interest Income

Net interest income, fully taxable equivalent (non-GAAP)

$

255,331

$

203,942

Adjustments for taxable equivalent interest (1):

Loans

(2,192

)

(1,917

)

Tax-exempt investment securities

(4,505

)

(3,493

)

Total taxable equivalent interest adjustments

(6,697

)

(5,410

)

Net interest income (GAAP)

$

248,634

$

198,532

Net interest margin (GAAP)

3.53

%

3.47

%

(1) Fully taxable equivalent (FTE) basis using a federal income tax rate of 35%. The presentation of net interest income on a FTE basis is not in accordance with GAAP, but is customary in the banking industry.(2) Nonaccrual loans and loans held-for-sale are included in average balances reported and are included in the calculation of yields. Also, tax equivalent interest includes net loan fees.

Accruing loans contractually past due 90 days or more as to interest or principal payments:

Commercial

221

3

370

364

122

711

52

Commercial real estate

739

3

—

254

216

56

148

Real estate construction

1,439

—

—

—

—

—

—

Residential mortgage

375

407

423

402

572

424

172

Consumer installment

—

—

—

—

—

—

—

Home equity

628

1,071

679

1,267

558

588

429

Total accruing loans contractually past due 90 days or more as to interest or principal payments

3,402

1,484

1,472

2,287

1,468

1,779

801

Nonperforming troubled debt restructurings:

Commercial loan portfolio

15,261

14,240

15,351

16,297

15,559

14,547

15,810

Consumer loan portfolio

1,691

2,233

3,013

3,071

3,554

3,365

2,690

Total nonperforming troubled debt restructurings

16,952

16,473

18,364

19,368

19,113

17,912

18,500

Total nonperforming loans (1)

61,651

61,954

73,255

83,880

81,217

70,906

72,741

Other real estate and repossessed assets

20,730

8,440

9,248

9,935

11,207

14,197

14,744

Total nonperforming assets

$

82,381

$

70,394

$

82,503

$

93,815

$

92,424

$

85,103

$

87,485

Nonperforming loans as a percent of total loans

0.48

%

0.81

%

0.99

%

1.15

%

1.13

%

1.01

%

1.28

%

Nonperforming assets as a percent of:

Total loans plus other real estate and repossessed assets

0.65

%

0.92

%

1.12

%

1.29

%

1.28

%

1.21

%

1.53

%

Total assets

0.47

%

0.74

%

0.89

%

1.02

%

1.00

%

0.94

%

1.16

%

Performing troubled debt restructurings

$

48,835

$

49,378

$

49,886

$

47,810

$

44,803

$

45,808

$

45,981

(1) Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming loans because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans.

(1) Assumes transaction expenses are deductible at an income tax rate of 35%, except for the impact of estimated nondeductible expenses incurred in periods when the Corporation completes merger and acquisition transactions.